China is not alone in real estate frenzy
In the past decade, China’s real estate market has been magical for investors. The housing bubbles just got bigger and bigger, rather than bursting, as predicted by the pundits. But rising alongside housing prices is the levels of depression and anxiety among Chinese people. Those who have bought property want to kick themselves for not buying more. Those who haven’t worry they’ll never be able to afford to get into the market. It seems all Chinese are driven crazy by the ever robust real estate market.
The latest frenzy has been unleashed in recent months. Beijing’s home prices were up 24 percent in February from a year ago. On the social media platform, WeChat, many people in middle class say that they are going to be forced out of the city and have to flee elsewhere.
Li Fang, the editor of Tencent. com and a local Beijinger shared on his WeChat account the sadness and helplessness he feels when seeing his friends pushed out of Beijing by the skyrocketing housing prices. The piece went viral online. Another broadly read WeChat article called “Pretending to be in New York” compared the housing prices in Beijing and New York, and concluded that in the middleand low- end market, Beijing’s prices are much higher.
All of this should make me feel lucky for living in New York. I do, but for a different reason.
It is true that houses are generally cheaper in New York. But that doesn’t mean we don’t have our fair share of pressure from the real estate market. According to the latest market report from Douglas Elliman, the median sales price for coops and condos in Manhattan was $ 1.1 million in 2016, a 27.9 percent leap from 2007. And the median sales price for a townhouse was $ 4.97 million, a 58.3 percent jump from 2007.
It is worse ( or better, depending on your perspective) in some other parts of the city. According to Property Shark, the online home price tracking website, prices in trendy Williamsburg in Brooklyn increased 269 percent between 2004 and 2014. And in the East New York neighborhood, also in Brooklyn, the jump is a whopping 320 percent.
The media here are as provocative as their Chinese counterparts. For example, a headline from DNAinfo. com in 2016 was “Do You Regret Not Buying a New York Apartment 10 Years Ago You Should.”
And the people here also feel the pinch. Last March, the news website Business Insider republished a piece written by Kali Geldis and originally posted on Credit. com. In the piece with a headline “I just left New York City – here are 11 ways the move has saved me money,” the author, a young journalist, explained why she decided to leave New York after living here for six years. “I knew certain dreams I had, like buying a home, were just not possible in a city where rent on a onebedroom apartment within an hour’s commute of my office was continually edging closer to $ 2,000 a month,” she said.
Geldis is far from alone. Members of the middle class fleeing New York because of property costs have been a topic here in the past 30 years. Overall, there has been an exodus of people from New York state.
You can even argue – to some extent – that New Yorkers have more reasons to be anxious than people in China over rising housing prices. Home ownership in the US at 63.7 percent is lower than in China where the official figures put house ownership at above 90 percent. New York’s home ownership is lower – at only around a third – compared to the 70 percent official figure in Beijing.
This also, mind you, explains why New Yorkers feel less anxious about housing – not everyone believes buying is their best option. This is partly because of the authorities’ assistance to renters. Several programs, including the infamous rent control program, have been in place for decades to help low- income renters. And new tenant protection laws are passed one after another to prevent landlords from treating renters badly. Incentives like tax credits have been offered to developers to build affordable housing units for renters. And the current city administration has announced an ambitious plan to build 200,000 more such affordable units within ten years.
I have no doubt China is able to quickly adopt some of these policies to calm the housing frenzy. Beijing has already introduced tougher curbs on buying of investment properties.
But it’s going to take a longer time to fight against a culture where everyone likes to follow the trends blindly. That is what makes so many Chinese consider themselves losers if they haven’t been able to buy an apartment, and makes men who don’t own an apartment worry that they will be bachelors forever. In New York, it may be rough but it isn’t going to stop anyone finding a mate.